Managing Relationships in the Nonprofit Realm

Managing relationships is a critical part of doing business for any organization, whether it’s a commercial enterprise or a nonprofit. But while customer relationships are the primary concern for companies, the networking web is large and diverse for nonprofits.

First, there’s the population the nonprofit serves. Then there are the donors that fund the programs. Additional funding sources, such as grantors, government programs or agencies and other partners also play key roles, as do the volunteers whose footwork helps carry out the organization’s mission. Clearly, constituents are the lifeblood of a nonprofit organization.

Due to this complexity, reliable, thorough and easy-to-access information about an organization’s relationship with each constituent allows nonprofits to be more savvy about growing and strengthening connections — and regularly taking advantage of them for fundraising, mobilization, awareness and other support.

However, tracking the activities of donors and volunteers can present a challenge. After all, a nonprofit’s relationships with constituents can be varied. For example, a person may donate money, volunteer time, buy a T-shirt online and then attend a seminar — four separate interactions with the same nonprofit. Different staff members or departments may track each interaction, unaware of the others.

To tackle the challenge of consolidating constituent data into one place and making systems work together, many nonprofits recently have turned to a strategy borrowed from the commercial sector: constituent relationship management (CRM), known in the business world as customer relationship management.

For both terms, CRM defines the set of processes and supporting technologies an organization uses to acquire, retain and enhance relationships with the different constituent groups with which it interacts. An example being the Service Cloud (Ad) by Salesforce.

A CRM strategy that combines knowledge of supporters and processes with software can be a huge help. Organizations will be rewarded greater knowledge of their constituents, improved efficiency and increased ease at tweaking processes to improve the user experience for all constituents. This in turn brings more value to the organizations.

Before an appropriate software solution can be implemented, however, the organization must first define its CRM strategy. This is a three-step process: First, the organization must identify its constituent groups; then it must outline its key processes; and finally, it has to understand the process mix.

Identifying Constituent Groups

Many nonprofits have more types of constituents than they realize. A recent survey of staff members at a midsize nonprofit identified more than 25 spreadsheets, contact managers, slips of paper and custom databases to store information about interactions with different constituent groups. About half of these repositories and interactions were unknown to both management and the IT department.

Many nonprofits focus too narrowly on the constituents that typically provide income, such as donors, foundations, members and retail customers, but there are many other groups that can bring value to an organization:

Channel partners: Other nonprofits with constituents who could use programs or services, or government agencies that provide referrals to programs.

Suppliers and vendors: Those that provide supplies, services, IT and events.

Staff: Current employees, board members and advisers.

Outlining Processes

Next, an organization must document the means by which staff interacts with each of the identified groups. Are the interactions one-time contacts, or are there follow-ups or other forms of ongoing outreach? What kind of constituent data does staff collect? Core interactions should be separated from the peripheral. Identifying these interactions will help define the capabilities required of a software solution.

This exercise often yields constituent-centric process improvements that don’t require a technology investment. For example, a nonprofit might find an entire potential donor group is being ignored or a process that could be streamlined to save time and money. Human services organizations might find a way to tie outreach efforts into program delivery or consider how successful program delivery can influence outreach and participation.

To better understand the processes common to nonprofit organizations, it’s helpful to compare them to their siblings in the commercial world: Each constituent group has some kind of marketing, sales and service cycle, though efforts for each step will vary greatly and sometimes overlap.

For nonprofits, marketing takes the form of outreach or communications. Most nonprofits engage in some kind of outreach efforts — such as direct mail, e-mail newsletters, ad buying or others — geared toward creating greater awareness of programs and services among clients, raising money, building advocacy efforts and growing general organizational support. A typical marketing process also involves measuring the results of these communications.

Any process that moves a person from being merely interested to making a commitment, making a purchase or taking an action is a sales process. Nonprofits sell things, too, whether programs, products, services or ideas. A nonprofit sales process might focus on convincing a grant-maker to provide funds for a particular program, talking a client into attending a free event or persuading a legislator or a citizen to vote a particular way.

The complexity of the sales process is proportionate to the size of the commitment. A free one-hour seminar or $25 donation would have a very short sales cycle, while a 10-week program or $1,000 donation would require a more complex process.

Service at nonprofits consists of the delivery of programs and support to constituents. While this typically is the most important part of a nonprofit’s work, it’s too often left out of CRM discussions and tracked only through isolated applications.

Some organizations have limited service components, such as responding to requests or requirements from funders, legislators, media, schools and other such constituents. For other organizations — such as food banks, health and wellness groups and legal services organizations — services comprise the bulk of their efforts. By including service processes as part of a CRM strategy, nonprofits can better recruit and serve their program participants, as well as include these clients as potential organizational supporters.

Understanding the Process Mix

The final step is prioritizing constituent groups and processes to get an idea of the mix as it will apply to a software solution. For example, consider a youth development organization that relies primarily on client referrals and has service-heavy processes: incident reporting, service plans, personal goals and outcomes. This organization will need strong service-tracking capabilities but less rigorous marketing functionality. Alternatively, a membership-based organization will need stronger marketing and sales functionality.

An organization might use a different process mix for each constituent:

Advocates for a public advocacy organization: To recruit advocates, organizations would use high-complexity marketing efforts. Medium-complexity sales efforts would focus on donations and calls to action. Low-service efforts would require only responding to questions and providing information about the impact of actions.

Members of a trade association: Organizations would use low marketing efforts, with some outreach to support membership and event sales; high sales efforts, including complex higher-cost memberships and simple sales of events and merchandise; and medium-service efforts, mostly responding to inquiries.

Clients of a service organization: Organizations would use low marketing efforts, with some relatively limited outreach; low to medium sales efforts, including convincing potential clients to participate in programs; and high service efforts, with complex case and outcomes management.

Once processes are unraveled and identified, organizations can confidently seek the software solution to support their CRM strategies.

How Technology Plays In

So which software do nonprofits use to support these CRM strategies? That’s not an easy question. There’s no shortage of software applications designed to manage nonprofit constituent relationships. But many of them — including many that call themselves CRM solutions — focus on a limited set of constituents, such as donors, rather than everyone a nonprofit deals with.

In truth, because of the nature of nonprofits, none of the solutions is comprehensive or inclusive enough out of the box to be ideal for many different types of nonprofits. It’s nearly impossible for a single vendor to create software capable of handling the widely diverse needs and processes of the more than 1.8 million nonprofits registered with the IRS.

Consequently, many nonprofits use multiple software packages to meet their needs — for example, Blackbaud Raiser’s Edge for off-line fundraising and Convio for online interactions. Often, nonprofits have more sophisticated e-mail outreach needs than the vendors above provide, so they seek to add a bulk e-mail package such as VerticalResponse or WhatCounts.

Additionally, human services organizations often have client tracking and reporting needs that none of these vendors cover out of the box, and therefore, they need to add a specialty case management application. In fact, some less critical constituent processes may be best supported informally, such as with spreadsheets.

Buying a prepackaged suite gives nonprofits a lot of integrated functionality almost immediately. However, some open-source software platforms such as CiviSpace or SugarCRM and commercial providers such as Salesforce are providing powerful systems with flexibility to build custom-tailored systems rather than buying one-size-fits-all packaged applications. These platforms include robust ecosystems with interchangeable parts, making them an increasingly compelling option for nonprofits that can undertake a development process.

The critical part of the process is acknowledging each piece of data and having a plan to tie it into a larger context — whether that means a packaged, consolidated system or just uploading a spreadsheet on a weekly basis.

While nonprofits can’t expect to purchase a silver-bullet software application to manage all this data, it’s clear that CRM software solutions nonetheless play a large role in how nonprofits run their day-to-day operations and the future opportunities they will uncover.

Paul Hagen is the founding partner of Kairos Strategies, a consultancy that helps social enterprises and nonprofit organizations scale through the effective use of technology. Chris Bernard is a freelance writer based in Maine. For this article they collaborated with Idealware, an organization that provides candid software information to nonprofits. They can be reached at editor (at) certmag (dot) com.